The Asian Infrastructure Investment Bank (AIIB) has recently approved a loan of $750 million for India. This significant financial aid will be used to strengthen the country’s efforts in mitigating the devastating impact of the Covid-19 pandemic, specifically focusing on poor and vulnerable households. This follows an earlier approval of $500 million granted by AIIB for India’s ‘Covid-19 Emergency Response and Health Systems Preparedness Project’.
About the $750 Million Loan
The substantial loan of $750 million is co-financed by both the AIIB and the Asian Development Bank (ADB). The funds aim to ensure economic resilience to prevent long-term damage to productive capacity, including human capital. This support goes towards bolstering economic aid for businesses, catering particularly to the informal sector. Additionally, it aims to expand social safety nets for those most in need and strengthens the country’s health care systems.
AIIB’s Sovereign Loans to India
The loans offered by AIIB to India amount up to $3.06 billion. The current loan represents the second one under AIIB’s Covid-19 Crisis Recovery Facility for India. This facility was created in response to pressing economic, financial, and public health issues. It supports quick recovery post-crisis by offering $5-10 billion of financing to both public and private entities over a span of 18 months from April 2020 to October 2021.
About AIIB
The Asian Infrastructure Investment Bank is a multilateral development bank established with a mission to improve social and economic outcomes in Asia. Officially started on 25th December 2015, it operates out of its headquarters in Beijing, China, and boasts of 102 member nations. Fourteen of the G-20 nations are AIIB members, including significant global players like France, Germany, Italy, and the United Kingdom.
ADB’s Support to India
The Asian Development Bank has assured the Indian government of $2.2 billion in support in its fight against the Covid-19 pandemic. Prior to this, it had provided a loan of $1.5 billion to India.
About ADB
The Asian Development Bank was established on 19th December 1966 and is a regional development bank headquartered in Manila, the Philippines. The organization is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific while maintaining its efforts to eradicate extreme poverty. As of 31 December 2019, ADB’s five largest shareholders are Japan and the United States (each with 15.6% of total shares), the People’s Republic of China (6.4%), India (6.3%), and Australia (5.8%).
Thus, as India continues its fight against COVID-19, it has the financial backing of significant global organizations such as AIIB and ADB. Financial aid such as loans will help strengthen both its healthcare system as well as provide necessary support to vulnerable populations and sectors.
